Sustained Negative Cash FlowPersistent operating and free cash outflows materially weaken earnings quality and restrict internal funding for capex, working capital, or dividends. Over months, this forces reliance on external financing or asset dispositions, increasing financing risk despite low leverage.
Severe Margin CompressionSharp margin erosion drastically reduces resilience to cost inflation and erodes free cash flow even if revenue grows. Low single-digit net margins limit reinvestment capacity, weaken returns on capital, and suggest structural pricing or cost pressures that may persist absent business model change.
Volatile Revenue And EarningsSignificant top-line volatility undermines predictability of cash flows and complicates planning for staffing, capex, and debt servicing. Inconsistent revenues reduce credibility with customers and lenders, making sustainable margin recovery and steady cash generation harder over the medium term.